Event: on August 30, 2022, Dongfang Tong released the 2022 mid-term report. In the first half of 2022, the company achieved operating income of 201 million yuan, down 3.38% from the same period last year; net profit from home was-91 million yuan, down 544.95% from the same period last year; and net profit from non-return was-98 million yuan, down 222.28% from the same period last year. The performance fell short of market expectations.
Main points of investment
Affected by the epidemic performance pressure, the telecom industry revenue growth is faster: in 2022 H1, company revenue declined, mainly due to the impact of the epidemic, the real economy investment in middleware slowed down, temporarily pulled down the rebound in market growth, the user side of the project construction process has slowed down. In terms of different industries, the government industry achieved revenue of 73 million yuan, a decrease of 24.00% over the same period last year, a gross profit margin of 70.62%, a decrease of 28.81 pct over the same period last year, while the telecommunications industry achieved revenue of 81 million yuan, an increase of 52.49% over the same period last year, and a gross profit margin of 48.84%, a decrease of 21.75pct over the same period last year. The decline in the company's gross profit margin is mainly due to the increase in the early input costs of some strategic expansion projects and the intensification of competition in the industry in the first half of the year.
Remarkable achievements have been made in the market expansion of the military industry field of middleware, and the product performance has been continuously improved: on the market side, while the company continues to maintain the advantage of market share among the government, finance, telecommunications and other traditional customers, pay attention to the business opportunities brought by the incremental market in military industry, energy, central enterprises and other emerging industries, and carry out market layout.
In 2022, H1, the company achieved remarkable market expansion in the military field of middleware business, with revenue growth of more than 150% compared with the same period last year. On the product side, in the first half of the year, the company released several batches of new versions of its products to enhance product functionality to better meet customer needs, and further strengthen product safety, and constantly optimize the product cloud. We expect that H2 Xinchuang market bidding is expected to speed up in 2022, and the company's middleware business is expected to return to rapid growth.
Internet security business has entered a period of rapid growth, and its market share has further expanded: benefiting from the regulatory requirements of industrial development, policies and regulations, the core products of the company's security business, IDC network and information security products, have entered a period of rapid growth. In terms of data security projects, in the first half of the year, the company has undertaken the construction of 12 mobile network department provinces, 5 mobile industry branch provinces, and expanded telecom, Heilongjiang national network, Hebei national network, Beijing post and other industry cases, and successfully won the bid China Mobile Limited 2022 IDC/ISP information security management system second phase project. In terms of content risk control business, the company opened up customers in several provincial branches of China Mobile Limited and China Telecom Corporation in the first half of the year, and the cumulative number of contracted customers increased by 12.5%. The company has further expanded its market share and ranked among the best in customer satisfaction.
Profit forecast and investment rating: middleware is one of the three basic software and the underlying core software replaced by localization. According to the data of World Planning Information, Dongtong takes the lead in Chinese middleware products with a market share of 9.7% in 2021. Based on this, we maintain the 2022-2024 homing net profit forecast of 317,050,535 million yuan, maintaining the "buy" rating.
Risk hint: the promotion of localization policy is not up to expectations; the intensification of competition in the industry leads to a decline in product prices.
